Financial Analysis

18. Acquisition Contingencies and Other Payable to Uonone Group Effective on May 12, 2016, one of the Companys PRC subsidiaries entered into a debt settlement agreement (the Debt Settlement Agreement) with one of the former owners of the subsidiary, Uonone Group Co., Ltd., (Uonone Group), pursuant to which the subsidiary and Uonone Group agreed to settle a list of pending business transactions from December 31, 2012 to December 31, 2015, pursuant to which Uonone Group agreed and had paid the subsidiary a total amount of RMB 8,009,716. An additional contingent liability related to estimated costs of a project known as Ningxia project completed by the subsidiary prior to the Companys acquisition of the subsidiary of approximately RMB 3.0 million (or approximately $429,000) was also included as a receivable from Uonone Group (see Note 11 Other Receivables and Current Assets, Net) with the corresponding liability recognized by the Company on the date of acquisition. As of December 31, 2021, Uonone Group had repaid all the amounts agreed to under the debt settlement agreement except for the RMB 3.0 million contingent receivable from Uonone Group discussed above. Uonone Groups obligation on the contingent receivable does not arise until and unless the Company becomes obligated to pay the contingent liability. At December 31, 2025 and 2024, the Company had no payment obligations with respect to the assumed contingent liability and accordingly, Uonone Group had no obligation to the C …

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20. Commitments and Contingencies Operating Leases The Company has entered into various non-cancellable operating lease agreements for certain of its offices, warehouse facilities and office equipment, vehicles, and solar energy systems, both in the U.S. and in the PRC. The Company determines if an arrangement is a lease, or contains a lease, at inception and records the leases in the consolidated financial statements upon lease commencement, which is the date when the underlying asset is made available for use by the lessor. Effective March 31, 2024, the Company terminated its lease with Fallow Field, LLC, a related party, for its office space in Diamond Bar, California. In connection with the early lease termination, the Company recognized a gain on the lease termination of approximately $77,000 during the year ended December 31, 2024. Related party rent expense related to Fallow Field, a related party, was $36,436 for the year ended December 31, 2024. The Company had no related party lease arrangements in the year ended December 31, 2025. For the years ended December 31, 2025 and 2024, rent expense for offices, warehouse facilities and equipment, including rental expense for related party leases in 2024, was approximately $1.7 million and $1.8 million, respectively. These amounts include short-term leases and variable lease costs, which are immaterial. The Company did not incur any rental expense for related party leases in 2025 since all related party leases were terminat …

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Years Ended December 31, 2025 2024 Solar energy and battery storage systems Large-scale EPC contracts $ 60,172,308 $ - Sales on non-installment basis 16,915,708 13,828,244 Third-party leasing arrangements 6,339,216 3,983,612 Operating lease revenues 64,289 71,082 Power purchase agreement revenues 15,811 26,757 Total solar energy and battery storage systems 83,507,332 17,909,695 LED projects 7,193,087 4,737,075 Financing related 282,116 340,111 Total revenues $ 90,982,535 $ 22,986,881

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13. Goodwill The activity of goodwill is as follows: December 31, 2025 2024 Balance beginning of period $ - $ 7,584,779 Effect of exchange rate - (122,891 ) Asset impairment - (7,461,888 ) Balance end of period $ - $ - During the year ended December 31, 2024, as a result of the continued headwinds facing China's economy after the pandemic and the economic indicators seem to indicate further future contraction, all of which have a direct impact on the Company's ability to generate new businesses in its China operations in the foreseeable future, accordingly the Company recognized a $7.5 million goodwill impairment. …

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"22. Income Taxes The components of the pretax income (loss) from operations for the years ended December 31, 2025 and 2024 are as follows: Years Ended December 31, 2025 2024 Domestic (U.S. operations) $ (7,159,752 ) $ (25,131,654 ) Foreign (PRC operations) (300,191 ) (8,166,852 ) Income (loss) before income taxes $ (7,459,943 ) $ (33,298,506 ) The income tax provisions (benefits) for the years ended December 31, 2025 and 2024 are as follows: Years Ended December 31, 2025 2024 Current U.S. federal $ - $ - State and local 68,331 6,000 Foreign (PRC operations) 197,475 (173,904 ) Total current income tax expense (benefit) 265,806 (167,904 ) Deferred U.S. federal - - State and local - - Foreign (PRC operations) (1,400,381 ) 1,831,734 Total deferred income tax expense (benefit) (1,400,381 ) 1,831,734 Income tax expense (benefit) $ (1,134,575 ) $ 1,663,830 Upon adoption of ASU 2023-09, Improvements to Income Tax Disclosures, as described in Note 2, Summary of Significant Accounting Policies, the reconciliation of taxes at the federal statutory rate to our provision for (benefit from) income taxes for the year ended December 31, 2025 was as follows: December 31, 2025 Rate Amount Income taxes at statutory rates 21.00 % $ (1,566,588 ) State taxes in Texas and made up the majority (greater than 50%) of the tax effect in this category, net of federal benefit (0.72 )% 53,982 Foreign rate differential China Valuation allowance 15.22 % (1,135,313 ) Other 0.06 % (4,554 ) Effects of cross-bo …

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As an emerging growth company, the Company has elected to use the extended transition period for complying with any new or revised financial accounting standards pursuant to Section 13(a) of the Securities and Exchange Act of 1934. In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures (Topic 740). ASU 2023-09 is intended to enhance the transparency and decision usefulness of income tax disclosures. The amendments in ASU 2023-09 address investor requests for enhanced income tax information primarily through changes to the rate reconciliation and income taxes paid information. ASU 2023-09 is effective for annual periods beginning after December 15, 2024. The Company adopted this standard prospectively for the year ended December 31, 2025. The adoption impacted the Companys income tax disclosures, but did not impact the Companys consolidated financial statements. In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. This update requires that at each interim and annual reporting period public entities disclose (1) the amounts of purchases of inventory, employee compensation, depreciation, amortization, and depletion) in commonly presented expense captions; (2) certain amounts that are already required to be disclosed under current GAAP in the same disclosure as the other disaggregation requirements; (3) a q …

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19. Related Party Transactions See Note 15 for related party lease and loan transactions and Note 20 for the termination of related party lease.

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3. Disaggregation of Revenue The following table summarizes the Companys revenue by business line for the years ended December 31, 2025 and 2024: Years Ended December 31, 2025 2024 Solar energy and battery storage systems Large-scale EPC contracts $ 60,172,308 $ - Sales on non-installment basis 16,915,708 13,828,244 Third-party leasing arrangements 6,339,216 3,983,612 Operating lease revenues 64,289 71,082 Power purchase agreement revenues 15,811 26,757 Total solar energy and battery storage systems 83,507,332 17,909,695 LED projects 7,193,087 4,737,075 Financing related 282,116 340,111 Total revenues $ 90,982,535 $ 22,986,881 …

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"24. Segment Reporting The chief operating decision maker (""CODM"") is the Chief Executive Officer. As of January 1, 2024, the Company has determined that it has one reporting segment which is solar energy systems in the United States. The Company has not generated any revenue from its China operations since 2021, it does not have any contracts for services in China, it does not have any marketing activities in China and its China operations is no longer considered a reporting segment. The CODM regularly reviews operations and financial performance at the consolidated level and uses net income (loss) to allocate resources (including labor, technology and capital resources) for the single reporting segment to make decisions regarding annual budget, entering new markets, marketing decisions, pursuing new business, and driving the Company's mission. The following table shows the operations of the Companys reporting segment for the years ended December 31, 2025 and 2024: Years Ended December 31, 2025 2024 Segment revenue Large-scale EPC contracts $ 60,172,308 $ - Solar energy systems 21,461,983 16,675,612 Battery only sales 1,794,460 1,136,065 LED operations 7,191,567 4,737,254 90,620,318 22,548,931 Reconciliation of revenue Finance revenue 277,667 336,937 Other non-core revenue 84,550 101,013 90,982,535 22,986,881 Less Direct and indirect costs 81,662,519 10,949,411 Subcontractor costs 737,547 2,154,031 Commissions and lender fees 3,491,278 2,805,218 Compensation and benefits 2 …

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21. Stockholders Equity (Deficit) Issuance of Common Stock under Private Placement During the year ended December 31, 2025, the Company issued a total of 9,635,712 shares for a total consideration of $7,652,535, at prices ranging from $0.70 to $0.90, with an average purchase price of $0.79. The purchase price was 75% of the market price on the date of the respective agreements. Under the Nasdaq regulations, the Company may not be able to raise any significant funding from the sale of common stock at a discount from market in the near future without stockholder approval. The consideration for the shares includes cash payments and cancellation of indebtedness of the Company. 2016 Long-Term Incentive Plan During the years 2015 to 2019, the Company granted shares of restricted stock and incentive stock options to employees and consultants, of which 264,650 shares of restricted stock and incentive stock options to purchase 5,898,137 shares were outstanding at the date of the Companys initial public offering. Under the terms of the restricted stock and incentive stock options, the restricted stock and options became vested and non-forfeitable upon the completion of the Companys initial public offering, which occurred on February 12, 2024, the effective date of the registration statement relating to the Companys initial public offering. Under GAAP, upon the completion of the initial public offering, the value of the restricted stock as well as the incentive stock options is treated …

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"25. Subsequent Events Convertible Notes Issued In January and February 2026, the Company issued two convertible notes in the principal amount of $1.0 million to limited partners of CEF I, which resulted in a reduction of $1.0 million in the principal amount of the related party notes to CEF I. In January 2026, the Company issued a convertible note in the principal amount of $500,000 to a limited partner of CEF II, which resulted in a reduction of $500,000 in the principal amount of the related party notes to CEF II. Recent Sales of Common Stock In January 2026, the Company issued a total of 2,000,000 shares of common stock to two accredited investors for a total of $1,096,000. The shares were issued at a price per share of $0.548 which represented a 25% discount from the market price of the common stock. No brokers were involved in the sales. The issuance of the shares was exempt from registration pursuant to Section 4(a)(2) of the Securities Act as a transaction not involving a public offering. The proceeds from the sale are being used for working capital. Lease Amendment On January 28, 2026, the Company entered into an amendment to the lease for its facilities at 3080 12th Street, Riverside, California. The amendment extends the expiration date of the lease from December 31, 2026 to December 31, 2033. The annual base rent during the term, as extended is $1,855,566 for 2026 and it increases annually until $2,282,112 for 2033. The Company also pays certain operating expenses …

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